Castrol India held a conference call on 01 August 2023 to discuss the results for the quarter ended June 2023 and way forward. Mr. Sandeep Sangwan, Managing Director and Mr. Deepesh Baxi, Chief Financial Officer and Whole time Director of the company addressed the call.

Highlights of the Concall

• The company has expanded its portfolio by entering the auto care segment with a variety of products in May. And this quarter, it plans to leverage its extensive network of distributors, modern trade partners, e-commerce channels and Castrol auto service outlets and bike points to reach consumers with this offering.

• The company has also successfully launched Castrol CRB ESSENTIAL, a 5 product variant range of affordable commercial vehicle engine oils to cater to different specifications.

• To win in the SUV market, which is almost kind of 50% of the new car sales, Castrol India has launched MAGNATEC SUV 5W30, a premium full synthetic offering, which has gained a great response from its customers already.

• Pursuant to a June 2023 agreement with Mahindra Insurance Brokers Limited, Castrol Auto Service multi-brand passenger car workshops have an option to be empaneled as distributors of eligible insurance policies from top motor insurance providers through Mahindra Insurance Brokers Limited. The workshops can now potentially offer automotive insurance products digitally alongside repair and maintenance services for their customers vehicles.

• The company hs established a network of over 5,500 Castrol bike points and 350 Castrol auto service outlets by the end of the first half of CY23. In the second half, it aim to reinforce its position in the aftersales service market, committed to enhancing its presence and providing exceptional service to customers.

• Pursuant to alliances with OEMs for supply of EV fluids, Castrol India has launched Castrol ON EV transmission fluids and other relevant fluids for EVs for the aftermarket earlier this year. Consumers can now buy the product on e-commerce platforms.

• The company is additionally conducting ASDC-certified EV readiness trainings to make car and bike mechanics in India EV-ready. Until now, it has trained 200 mechanics across India. And in third quarter, it expect to further increase that number through providing more trainings. And this will help it strengthen market position going forward as well.

• The company continues to explore raw material optionality to reduce carbon footprint and its 3 state-of-the-art plants in Paharpur, Patalganga and Silvassa continue to perform well with a capacity of about 260 million liters for lubricants.

• The company moved its Patalganga plant to 100% renewable energy electricity now, and the plant is procuring this green electricity directly from the grid.

• Total volumes during the quarter was about 58 million liters versus 55 million liters the previous quarter.

• The company expects the contribution of EV fluids is very small and in coming 2-3 years is going to stay relatively very samll because of low penetration of cars in India, a lot of consumer demand is still being fulfilled by ICE vehicles. It expect the lubricants market even for a medium to long-term will continue to stay robust still well into the 2035- 2040

• The company is quite optimistic on lubricant demand in the second half of this year.

• EVs consume less fluids as compared to ICE because EV don't need any engine oil. But the technology is still developing and depending on how the technology develops will also determine need for EV fluids. For example, there's a higher need of thermal management and batteries for electric vehicles and that may consume fluids. So it's a function of time. Normally, the EV fluids tend to be filled for life.

• The company does not see margin compression happening in its business in the next few years because it will continue to be a branded player. And on the cost side also, it is working on formulations to improve its formulations and improve cost profile.

• Personal mobility accounts almost for about 45% of its revenues while Commercial vehicles account for another 35-40 percent and then balance is the industrial fluid.

• The company expect Ebitda margin to be in the range of 23-27%.